Launching a startup is hard, we know it. So it’s always helpful to get advice from a seasoned founder or investor.

In this article we dig into Sam Altman's insights from as many say “one of the best lectures in YC history” he gave in 2018 around operating a startup.

Launching a startup is hard, we know it. So it’s always helpful to get advice from a seasoned founder or investor. Sometimes we can miss the big picture, or don’t give enough attention to details. While listening to those who already succeeded in the space, we always can take something important for us and try to improve our process. Crucial then is to listen to good advice and reduce the background noise.

With the recent boom in the AI sector, there is no other company with that amount of attention as OpenAI, where Sam Altman is one of its founders and currently its CEO. He also managed Y Combinator and help a multitude of companies launch and scale. Altman was named one of the “Best Young Entrepreneurs in Technology” by Businessweek magazine in 2008, the top investor under 30 by Forbes magazine in 2015, and listed as one of the five most interesting startup founders between 1979 and 2009 by Paul Graham. Considering that, we could say that he is probably one of the best people to get advice when it comes to launching a startup and operating it from the scratch. In this article we dig into his insights from as many say “one of the best lectures in YC history” he gave in 2018. [1]

• Make a product so good people want to tell their friends about it (and it’s easy to understand)

When you think of highly successful companies such as Facebook, you may have discovered them through a recommendation from a friend who spoke highly of them. Therefore, the benchmark for a successful product is one that people enjoy so much that they share it with others. An important factor for such a product is its simplicity in explanation and ease of comprehension. If the concept cannot be explained in a few words or fails to capture people’s interest, it usually indicates unclear thinking or a lack of demand. Think of UX in crypto now…Even while people who are already in the space love using services here, it’s not easy to explain to the world how those products work and it takes a lot of time to get enough understanding to actually use them. If you are working on a new Web3 unicorn – think about how to make the onboarding as easy as possible!

 

• Look for markets with a high potential for exponential growth

As a founder you should seek out markets with exponential growth potential, a factor often overlooked by investors who prioritize the current growth rate. The most successful startups start in small, rapidly growing markets. For instance, the iPhone market was initially worth $0, yet grew exponentially in a short span of time. It is crucial for startups to ride the upward trend and not only focus on TAM (total addressable market) existing at the moment.

 

• Identifying real trends in the market

Differentiating between real and fake trends is crucial when investing your time in building on new platforms. Real trends are validated by strong user adoption and recommendation, while fake trends lack this intensity. For example, the iPhone initially had low sales figures, but its popularity grew among early adopters who used it daily and recommended it to others. In contrast, VR was a fake trend in 2018, as there was little usage and recommendation among early adopters. It’s essential to observe usage patterns and recommendations before investing in a new platform, so you can be sure you are at the right place and time with your venture.

 

• Having the right co-founder team, with the evangelist onboard!

Startups need a lot of brain and willpower. Usually, technical aspects are covered by the CTO and the business side is part of the CEO’s job. But the other aspect often forgotten by the founding team is that startups require an evangelical founder (typically it’s the CEO), who can recruit, sell the product, raise funds, and become the chief evangelist for the company. This person should be able to convey enthusiasm about the company’s mission and infectiously spread it to others. Building a team and achieving wild success is difficult without a leader who can fulfill these responsibilities. Remember that Foundance is made just for that – it’s the easiest place to take any time you need, and find your ideal co-founder!

 

• Ambitious vision

Having an ambitious vision is beneficial when starting a company. While grandiose claims may turn people off, gradually growing more ambitious over time can attract interest organically. Ambitious visions are exciting and fun to work on. It’s easy to attract the first few employees by offering equity, but it gets harder to convince subsequent employees to join. Therefore, having a clear purpose that matters to the world is crucial to attracting top talent and differentiating from other startups.

 

• Founders being confident and open-minded

Successful founders typically have a confident and definite view of the future. While they may be wrong, having conviction in their ideas and expressing them clearly correlates with success. It’s crucial to have an ambitious vision and be a clear leader who can confidently state what the company will achieve and why, even in the face of doubt. But important to add – it can’t close the minds of the founding team, there always has to be room for improvement and open conversation about the problem you want to solve and get to know if you could improve something in your strategy.

 

• Few tips around the team

Building a successful startup team requires more than just smart, hardworking individuals who communicate well. It’s crucial to have optimists who believe in the company’s vision and are undeterred by naysayers. You also need idea generators who constantly suggest new ideas, adapt quickly, and have a bias toward action. 

 

Founders must maintain momentum to keep the team and company moving forward. Startups thrive on momentum, and losing it can be difficult to recover from. This requires a relentless focus on delivering results and a commitment to working hard, especially in the early days. While startups may not provide the best work-life balance, the payoff can be enormous for those willing to put in the effort.

 

An interesting thing to highlight is that you can see some advantages in the inexperience of your team when you start. This can allow you to take more risks and magic things can happen with startups, especially in the early days before they’ve learned they’re not supposed to be able to do certain things.

 

• Competitive advantage over time

Startups also need to have a plan for creating a competitive advantage over time. While this may sound obvious, it is a crucial aspect that some founders overlook. Surprisingly, some founders have never even considered this aspect. All successful businesses have an answer to this question, and it is important to have a plan in place to create a long-term competitive advantage or network effect. 

 

• You must have a business plan

Having a sensible business model is another essential aspect that startups need to consider. While it is not necessary to have everything figured out in the beginning, it is crucial to have a plan in place for generating revenue. Unfortunately, many founders seem to overlook this important aspect. When asked about their revenue model, some look perplexed, indicating that they have never considered it before. This is a concerning sign. Similarly, when asked about their growth and user acquisition strategies, and they have no concrete plan, it is another indication that they may not be on the right track. While it may seem like common sense, these fundamental questions can make or break a startup.

 

• Know your advantages over big players and use them

Firstly, big companies have a much more difficult time saying “yes” to ideas that may sound bad but are actually good. This is because there are more decision-makers involved in the process, and one “no” can kill an idea (imagine a workflow when your idea has to be passed to 5 different managers before coming to CEO’s table). Startups, on the other hand, have more flexibility to receive feedback and pivot their ideas. Secondly, startups thrive in fast-changing markets because they are more agile and able to make decisions and adapt more quickly than big companies. Lastly, startups usually win in platform shifts. After a big platform shift, startups have the advantage of being able to make strategic pivots quickly while big companies struggle to do so. Overall, these are just a few of the reasons why startups can beat big companies. Those advantages are much bigger than sometimes we think, and it’s crucial that startup founders use them to push their ideas forward at a very fast pace.

 

As we highlighted at the beginning – sometimes the most obvious things are forgotten, and a startup can find a lot of edges while taking them seriously. Take your time, and think about how to push your idea, considering the most important aspects listed here! Don’t hesitate, join Foundance, and use the resources available on our platform to start, test and grow your idea. Launching a startup never has been so easy, try it today!

 

Citations:

[1] https://www.youtube.com/watch?v=0lJKucu6HJc&t=9s